As Djibouti Prepares To Topple Next, Should One Go Long A Girl's Best Friend?

As what is rapidly becoming the biggest wave of revolutionary discontent since 1989 Eastern Europe spreads to every less than wealthy country and region, the next regime to topple may be that of smallish Ethiopia and Somalia neighbor Djibouti. The tiny country, with a population of less than a million, known only for being situated at the horn of Africa, has just seen a major (relatively speaking) protest, calling for President Ismael Omar Guelleh to step down. And while the country is completely insignificant geopolitically, it is merely a stepping stone as the African dominoes spread south: are Ethiopia and Somalia next to go? And after them all of central, and then southern Africa? So here's a thought - should the unrest reach Congo, and eventually South Africa, what will happen to the price of diamonds? While De Beers will be giddy to see a plunge in already artificially low supply, the story will be of course that no more shiny pure carbon crystals are made. And as the natural market for diamonds tends to be the rather affluent portion of society which is the only one to have benefited from loose liquidity, passing on diamond prices may not be perceived as all that difficult?

Djibouti has a largely unknown US C4I complex in the form of Camp Lemonnier - still spelled wrong? - watching entrance into the Red Sea. I think its the only official US base - beachhead for Africa. The 13th demi brigade French Legion still ops out of there also. Also some regular French army. About a million skinnies. Very interesting geology.

Agree. Like it's model, the British Empire, US hegemony depends on control of key shipping lanes. The straight of Bab el-Mandab is crucial to supplying Western Europe through the Suez.

Bahrain and Djibouti are two potential flash points where the US has key bases. For context, look at what happened after Marcos was deposed in the Philippines: two major US bases had to close (Subic Bay naval base and Clarke AFB).

The U.S. base in Djibouti also controls the drones operating over the Horn of Africa and across the straits in Yemen and southern Saudi Arabia, as well as serving as a listening post for tat part of the world. The rocket attacks on suspected AQ targets in Yemen were likely controlled from Djibouti.

Since the (upcoming) surge in the price oil, and the other items you mentioned, is now in the vernacular, and has been discussed on ZH extensively, it seems rather logical to expect a jump there. The question is what else, in addition to cocoa of course, will soon be a "story" bubble.

The problem with diamonds is their value has been inflated by artificially constrained supply for many decades. As a result, I would think the diamond cartel would make sure that diamond prices stay at the ideal point on the supply/demand curve intersection regardless of geopolitical turmoil.

If the idea is to find how inelastic demand is, this could serve as a strawman. Demand for high margin diamonds comes primarily from the uber wealthy who can probably meet new price levels. If the diamond cartel works in unison, it should be an easy transmission.

He is one of the guys who does'nt get the De Beer's closed box to sell off to his customers. He can choose.

So we discussed exit strategies to this global mess. He refuted my precious metals arguments in a smart way.

I said hey, I can move USD 1M in platinum in one suitcase.

He replied i can move USD 10M with one diamond I can swallow.

End of discussion!

The problem is knowledge. Not only the 4 C's but also the experience, the suppliers, the dealers, the customers, the entire environment around diamonds, not easy to attain, it all depends on how well you're connected and of course how knowledged you are about the "blood diamond" topic.

But give credit where credit is due, he definitely convinced me on his strategy.

Now the question would I invest with him and do I trust him?

Yes I do, because all the big diamond deals are based on trust, else you're out of business. It's a very small group and that's how business is done since decades, else you're out immediately! Being Jewish in this business has it's advantages. He's living it up.

Many fruits and vegetables on the shelves here in the UK and I suspect most of Europe, are produced in various parts of Africa. Morocco, Congo, Cameroon, and Ghana are some of the big agri exporters.

If history is any predictor of the future, diamonds will indeed be a major source of funding for any wars in Sub-Saharan Africa. Depending on the scale, we could be facing a diamond glut as the factions pay for soldiers, food, and guns with their rocks.

no way i could get the rock off wife's finger no matter the price of diamonds. and besides, after the price i paid with her dragging me to every single diamond parlor to find just the right one for her no way i sell, just on principle alone.

no i go to hospital a lot with accidents of my arms and fingers. you can drink a whole heck of a lot of water, to get swelling down, and slide rings off with some grease. they cut one ring off my finger, and just had the jeweler re solder it back together.

remember a few weeks back when all the usa ambassadors were recalled to the home office. i can't exactly remember the timeline but it sure seems like there might have been a heads up in there somewhere.

who knows the truth anymore but i also remember a year ago harry schultz reporting that all usa embassies were directed to keep six months or so of cash on hand for whatever reason. seemed odd at the time. maybe just planning. who knows?

its actually saudi that has me interested. i mean thats a hardcore US supporter and supported. how about if people starting wanting democracy there? theres some pretty big deals with oil going on, does america support the gov and supply tewar gas, rubber bullets, and water cannon. to the gov or support democracy loving people?

my bet is the gov. because you dont have an allience with people, or their ideals you have it with the guys in charge.

but it will be interesting to see how things pan out. as expediancy buries idealism in the sand.

Diamonds are the biggest scam out there. You have to be out of your mind to buy diamonds unless you a retailer and are confident of finding someone really stupid you can sell them on to (eg a man desperately trying to bribe a woman to marry him).

Oil will mean exactly dick and bubkiss in just a few short years. We'll get electricity directly from the sun through the earths magnetic fields and store it in ultra stable super capacitors for transport. Unfortunately that particular future won't happen if government doesn't settle it's ass down.

Takes about 3 weeks to turn a "seed diamond" into a flawless yellow diamond. Other colors are available but they take longer and aren't as expensive, so for now they are just making yellow diamonds. Cost to manufacture - less than 100 usd.

Very interesting article, but it's from 2003. Have you heard anything more recent? Diamond prices have definitely not gone down. I'm in the insurance biz, and we regularly replace lost/stolen rings. Diamonds, especially 1 carat and over have appreciated substantially.